Rouhani also pledged that the United States would not be able to prevent Iran from exporting its crude.

Rouhani has made similar threats in the months since President Donald Trump withdrew the U.S. from the 2015 nuclear deal and began restoring sanctions. Trump has vowed to eventually cut off all Iranian oil exports, but the administration has given waivers to several countries.

The tough talk from Rouhani, a relative moderate, has meanwhile been warmly received by his domestic hard-line rivals.

Brian Hook, the U.S. representative for Iran policy, dismissed Rouhani’s threat, noting that Iran does not control the Strait of Hormuz.

Later on Tuesday, Rouhani said he had rejected multiple U.S. requests for direct negotiations.

“In the past year, the current U.S. administration sent eight direct messages to negotiate,” he was quoted as saying by the semi-official Tasnim new agency. “I refused.”

He said he had also rejected an American request for indirect negotiations mediated by three European countries, without providing further details.

Trump has said he is willing to meet with Iran’s leaders. But Supreme Leader Ayatollah Ali Khamenei, who has the final say on all major policy decisions, has said Iran is forbidden from negotiating with the U.S.

Khamenei had cautiously approved the months of direct negotiations that led to the 2015 nuclear accord, in which Iran curbed its uranium enrichment in exchange for the lifting of international sanctions.

But he has said that Trump’s decision to withdraw from the agreement, despite Iran’s continued compliance, proves the U.S. cannot be trusted.

Iraq’s ministry of oil has published a very optimistic report on the country’s capability to ramp up production, but internal political issues could lead to a new crisis after this weekend.

At the same time that a new Iraqi government is forming, a government that is increasing Iranian influence within Iraq, another election is threatening the country’s stability.

On Sunday, Kurdistan is voting for a new KRG parliament, a vote that may result in new power brokers in Erbil. The Kurdish elections are hugely significant for the region, as they not only decide who is going to be put forward as the potential president of Iraq, but also reshape the KRG as an entity and its relations not only with Baghdad, but also with Iran and Turkey. A further destabilization of Iraq would be an outcome that most regional players aim to avoid, with the war in Syria and the imminent Iranian sanctions already causing uncertainty.

Iraq’s oil ministry has said that oil production from its northern Qayara oil field, which until last year was shut-in due to Daesh/IS, is currently ramping up production, aiming to reach a level of 60,000 bpd by the end of 2018. Current production is slated to be around 30,000 bpd. Officials have claimed that this oil is already being exported by Iraq’s State Oil Marketing Organization (SOMO). The crude is being marketed at present to Iran or Turkey. According to Iraqi sources, the field, which is located south of the Ninewa province in northern Iraq, still holds 1.52 billion barrels in proven reserves of very heavy oil of around 15-18 API degrees. Since a force majeure, the current operator of the license, Angola’s Sonangol, has not been producing. In June 2014, IS/Daesh took the field and held it for two year. Sonangol eventually resumed work at the end of 2017, drilling more wells and increasing production to around 30,000 bpd.

The failed bid for independence last year is still putting immense pressure on the historical power brokers in Kurdistan. The parliamentary election on Sunday could put an end to the delicate balance of power that has been pivotal to the stability of the country in recent decades, even during Saddam Hussein’s reign. Analysts still expect the two main Kurdish parties, the Kurdistan Democratic Party (KDP) and Patriotic Union of Kurdistan (PUK), to control the outcome of these elections. There are, however, some splits within the PUK, which could lead to Masoud Barzani’s KDP taking a dominant position in Kurdish politics. Barzani is also likely to have a decisive influence on the formation of the federal government in Baghdad. Barzani has come under pressure from Baghdad, however, as he was leading the call for independence in 2017. Kurdish voters are expected to play a significant role in the elections as Baghdad has taken some territories from the KRG, limiting the region’s economic autonomy. Baghdad will be watching Sunday’s election carefully. Both the KDP and PUK will be aiming for victory, with a view to filling the post of the federal president of Iraq. It is not yet clear what position the KDP or PUK will take in regard to a more hardline pro-Iranian Shi’a government in Baghdad. Interestingly, the Turkmen minority in the KRG has already stated that it will be joining, via the Iraqi Turkmen Front, the Reform and Reconstruction Coalition, which is supported by Shiite leader Muqtada Al-Sadr. This coalition is made up of the Saeroon bloc supported by the leader of the Sadrist Movement, Muqtada Al-Sadr (54 seats out of 329), and the Victory Alliance led by Al-Abadi (42 seats).

Al Sadr changed his political affiliations after a meeting in Beirut with Hezbollah’s Hassan Nasrallah and Iran’s Quds Force leader Qasem Soleimani. The three are reported to have agreed on a compromise candidate for Iraq’s next prime minister. Araba news media indicated that the likely candidate for Iraq’s premiership is Adel Abdul Mahdi, the former head of the Ministry of Oil and Ministry of Finance and a one-time vice president of the country. He seems to have been given the support of the Sairoon Alliance of Shiite cleric Muqtada al-Sadr and the Fatah Alliance of Hadi Al Amiri. The latter is of great concern to international observers and Western-Arab governments. Al Amiri leads Iraq’s Popular Mobilization Units currently, which have Iran’s backing. If this alliance of convenience is going to appoint the new PM, reaction from the U.S. and Arab countries could be harsh. At present, Washington still favors the current PM, Haider Al Abadi – who has come under severe pressure due to allegations of fraud and misconduct. At the same time, Arab countries, especially Saudi Arabia, the UAE and Egypt, will be worried about the Muqtada Al Sadr move to support the Iranian-Hezbollah backed Adel Abdul Mahdi. The direct connections with the Iranian backed militias and the ongoing power struggle between the Arab Alliance and Iran could lead to a possible confrontation. At present, Tehran seems to have the upper-hand in the Shi’a led country, able to pursue its goal of further integrating the Iranian and Iraqi economy, and building up a Shi’a power base in the region, linked with Syria and Lebanon. The fact that this new alliance has come after a meeting with Hezbollah chief Hassan Nasrallah and Iranian hardliner Maj. Gen. Qasem Soleimani, the commander of Iran’s special forces unit, Quds Force, is worrying. It seems that Iraq’s moderate but supreme religious leader Grand Ayatollah Ali al-Sistani has also given his blessing to the new alliance. The significance of this blessing for relations in the region remains unclear. Some have said that it is an obvious Shi’a move to block U.S. interest in Iraq, and also to counter possible actions by Washington or the Riyadh-led Arab Alliance against Iran.

It is unclear if Iran and Iraq have considered the possible negative reactions of anti-Iranian forces if a closer relationship between the two comes to fruition. The still simmering anti-Iranian feelings in major regions of the Shi’a provinces in Iraq, combined with a possible re-emergence of Kurdish power, is a real threat to Iraqi oil production. On top of all this, the continuing malpractices and misconduct of Shi’a militias, corruption in the government, and the overwhelming presence of Iran in Iraq is driving unrest in the Sunni controlled areas again. Sunni extremism has already been shown to have a fertile breeding ground in Iraq, with Al Qaeda and Daesh the most recent examples. Continuing division and religious cronyism will only lead to a re-emergence of violence in the south and instability in the north. Oil production and exports on both sides of this geopolitical chasm could be significantly impacted, especially if U.S. sanctions on Iran spread to include Iraq.

When OPEC and Russia shook on increasing crude oil production by a million barrels daily to stop the oil price climb that had begun getting uncomfortable for consumers from Asia to the United States, there was no sign of what was to come just two months later: slowing demand in Asia, ample supply, and a brewing price war between Saudi Arabia and Iran.

Iran, however, is not giving up so easily. It has more to lose, after all, with the harshest sanctions yet coming into effect in the coming months. The first shots in this war were already fired: Saudi Arabia cut its selling price for oil shipped to all its clients except the United States, S&P Global Platts reports in a recent analysis of OPEC. Iran did the same and has indicated that it is prepared to do a lot more if any other producer threatens its market share. In fact, statements from senior government and military officials suggest that Iran is ready to go all the way to closing off the Strait of Hormuz.

While analysts argue whether Iran’s threats have any teeth, oil demand news from Asia is giving OPEC another cause for worry. Slowing economic growth is dampening oil demand growth and both the Chinese yuan and the Indian rupee are falling against the dollar as a result of the economic developments in both Asia and the United States, whose economy is growing so fast that some are beginning to worry that it will soon run out of steam.

China and India, unsurprisingly, are shaping up as the battleground for Saudi and Iranian crude as two of the world’s top oil consumers. While India has suggested that it will try to comply with U.S. sanctions, China has stated the opposite. So, India could up its Saudi oil intake, but whether China will do so will depend on prices. Again, Iran has more to lose, so it might be willing to go further than Saudi Arabia. And the Saudis cannot go too far: they have huge financial commitments under the Vision 2030 reform strategy and they are already extending themselves with major investment projects at home and abroad.

A price war between Saudi Arabia and Iran could effectively put an end to OPEC. Iran has already voiced its strong opposition to the reallocation of individual member quotas suggested by Saudi Oil Minister Khalid al-Falih. According to his Iranian counterpart Bijan Zanganeh, this threatens its market share. Both are expected to attend a meeting of the Joint Ministerial Monitoring Committee that was set up to monitor the production cut deal struck with Russia in 2016. It’s hard to imagine Saudi Arabia assuring Iran that its market share won’t suffer any consequences from its stated pledge to fill any supply gap left by a cut in Iranian exports resulting from the U.S. sanctions. It’s also hard to imagine Iran shrugging and letting this go. Could OPEC be on the way out? Maybe.

The parliament’s website ICANA.ir quoted Oil Minister Bijan Zanganeh as saying that since Total first announced its decision a while ago, Iran has been in the process of “looking for an alternative” to Total. He didn’t elaborate.

There was no immediate comment from TotaI.

Earlier this month, Iran said China’s state-owned petroleum corporation took a majority 80 percent share of the project. CNPC originally had some 30 percent of shares in the project.

The 2017, $5 billion contract for new development at the massive South Pars offshore natural gas field was the first major gas deal signed with Iran following the 2015 nuclear deal.

Total said in May that its actual spending to date with respect to this contract was less than 40 million euros.

Total had pulled out of Iran already once before, in 2008, as Western sanctions over its nuclear program began to ramp up. The 2015 landmark nuclear deal — which curbed the Iranian nuclear enrichment program in return for the lifting of international sanctions — marked a rush for Western businesses to access Iran’s largely untapped market of 80 million people. Most prominently, airplane manufacturers rushed in to replace the country’s dangerously dilapidated civilian fleet.

A heated exchange of threatening words comes as tensions between Iran and the US reach new heights. In recent days, from Iran’s supreme leader to its president to its high-ranking generals come declarations that, if Tehran were not able to export oil via the Strait of Hormuz, “no other country would be able to do so”.

Destructive winds

Iran’s economy is already lashed with destructive winds from the US embargo on Iran’s oil export and banking system, which will take full effect on 4 November.

Shortly after the bombastic threats of the leaders of Iran and the US against each other, on 23 July, Telegram, the king of messaging apps and social media in Iran with more than 40 million users, was filled with users’ comments urging each other to buy US dollars as a hedge against depreciation of their assets.

There is a consensus among economists in Iran that the price of almost everything is tied to the value of the dollar

Iranians from across the political spectrum are extremely worried about the current trend. There is a consensus among economists in Iran that the price of almost everything is tied to the value of the dollar. Alluding to the sanctions, an Iranian minister said a few days ago, “We have to be ready for a storm after November.”

American officials initially said that Iran’s oil importers have to cut their imports to zero by November or face hefty penalties. But recently top Trump cabinet members, including Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo, said that the US would consider sanction waivers on Iranian oil imports. Will this solve the impediment that Iran would face come November?

Sanctions waiver

During Barack Obama’s presidency, prior to the culmination of the Iran nuclear deal, the US administration would issue waivers for a number of countries and Iran could sell around a million bpd crude oil compared to 2.7 million bpd in June 2018. The problem, however, was that oil payment routes to Iran were blocked by the sanctions on the Iranian banking system.

Through a very complicated mechanism, Iran managed to bypass the international banking system. However, that evasion scheme, claimed to be the largest sanctions busting operation in modern history, is now known to the Americans as a result of Reza Zarrab’s revelations during his trial on charges of evading Iran sanctions, and presumably will be blocked.

In an attempt to keep the nuclear deal alive, the European Union (the EU) has been trying to partly compensate the impact of US sanctions by offering to guarantee Iranian oil revenue and make direct money transfers to Iran’s central bank through its financial arm, the European Investment Bank (EIB). But there are doubts that the plan will become reality.

An Iranian dealer checks her phone at the stock exchange in the capital Tehran on 8 May, 2018 (AFP)

Last year, US naval intelligence said in a report that the Islamic Revolutionary Guard Corps’ (IRGC) naval doctrine was “based on speed, numbers, stealth, survivability, and lethality”. The report added that the IRGC had acquired fast attack craft, small boats, anti-ship cruise missiles and mines. Individually, these improvements cannot compete with Western technology.

“However, taken together, they could create an overall capability that is greater than the sum of its parts, particularly when employed in tight operational spaces like the Persian Gulf and Strait of Hormuz,” the report said

The question whether Iran has the military capacity to close the Strait, which is widely debated in the media, is misleading

In 1998, tension rose between Iran and Afghanistan when the Taliban admitted that they had killed eight Iranian diplomats in Mazar Sharif. Following the incident, the Iranian army and the IRGC amassed 100,000 troops at the Afghanistan border. Iran’s then reformist president, Mohammad Khatami, together with almost all top brass, supported the idea of a military response to the Taliban’s crime. Khamenei, however, opposed the attack and it was called off.

Another glaring example is the case of the nuclear crisis. Despite the pressure crippling sanctions imposed on Iran’s economy, primarily during the Obama tenure, when many Iranian politicians argued that Iran should withdraw from the Non-Proliferation Treaty on nuclear weapons (NPT) to get free of its commitments, Iran stayed as a signatory to the treaty over the ten years it took to resolve the crisis.

A sudden shift

Khamenei vehemently advocated the policy of “no talks with the US” from the day he took office as the supreme leader of Iran in 1989. However, in 2013, under the immense pressure of the sanctions, he announced a sudden shift in the country’s foreign policy to the doctrine of “heroic flexibility”. This paved the path for negotiations with the US that led to the resolution of Iran’s nuclear crisis. Flexibility “in certain circumstances is positive and necessary,” he remarked.

In another outstanding case, three weeks before the historic agreement between Iran and the group of six world powers, Ayatollah Khamenei identified seven red lines that, if crossed, would make a nuclear deal impossible. The nuclear deal reached in July 2015 clearly violated almost all of the red lines. He made no reaction to those reversals.

Shortly after the conclusion of the nuclear deal, Khamenei wrote a letter to Rouhani to indicate that any new sanctions by “the opposing countries in the negotiations,” under any pretext, including “repetitive fake excuses of support for terrorism or human rights,” would void the agreement. However, although he continually attacks Trump’s move to abandon the deal unilaterally, Iran has not withdrawn from the agreement.

They also argue that “naval war is different from ground war. In a naval war, once your aircraft carrier is sunk you are defeated.” By engaging in an asymmetric naval war “we can sink the American’s aircraft carrier in 50 seconds,” asserted the IRGC Navy Commander Ali Fadavi.

– Shahir Shahidsaless is an Iranian-Canadian political analyst and freelance journalist writing about Iranian domestic and foreign affairs, the Middle East, and the US foreign policy in the region. He is the co-author of Iran and the United States: An Insider’s View on the Failed Past and the Road to Peace. He is a contributor to several websites with focus on the Middle East as well as the Huffington Post. He also regularly writes for BBC Persian. He tweets @SShahisaless.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.

Photo: A member of Iran’s elite Revolutionary Guards chants slogans after attacking a naval vessel during a military drill in the Strait of Hormuz in southern Iran on 25 February 2015 (AFP)

LONDON (Reuters) – Iranian vice president Eshaq Jahangiri acknowledged on Tuesday that U.S. sanctions would hurt the economy but promised to “sell as much oil as we can” and protect its banking system.

President Donald Trump said in May he would pull the United States out of an international nuclear deal with Iran and reimpose U.S. sanctions. Washington later told countries they must stop buying Iranian oil from Nov. 4 or face financial consequences.

Jahangiri said it would be a mistake to think the U.S. “economic war” against Iran will have no impact, but added: “We will make Americans understand this year that they cannot stop Iranian oil sales.”

The U.S. ambassador to Berlin called on the government of Chancellor Angela Merkel to block an Iranian attempt to withdraw large sums of cash from bank accounts in Germany.

Iran’s foreign ministry and the central bank have taken measures to facilitate banking operations despite the U.S. sanctions, Jahangiri said without elaborating.

ECONOMIC WAR

European powers still support the 2015 deal, under which Tehran agreed to limit its nuclear development in exchange for international sanctions relief. They say they will do more to encourage their businesses to remain engaged with Iran, though a number of firms have already said they plan to pull out.

Foreign ministers from the five remaining signatory countries to the nuclear deal — Britain, France, Germany, China and Russia — offered a package of economic measures to Iran on Friday but Tehran said they did not go far enough.

“We think the Europeans will act in a way to meet the Iranian demands, but we should wait and see,” Jahangiri said.

The pressure on Iran came as Washington had launched an “economic war with China and even its allies”, he said, referring to trade tensions between the United States and many of its main trading partners.

Jahangiri also accused Washington of trying to use the economic pressure to provoke street protests in Iran.

A wave of anti-government demonstrations against economic hardship and alleged corruption engulfed cities across the country in late December and early January.

Reporting by Bozorgmehr Sharafedin; Editing by John Stonestreet, Andrew Heavens and David Stamp

Trump told King Salman bin Abdulaziz Al Saud that the oil market could with more supply when the men spoke on Friday, the White House said. The Saudi leader said he was ready to raise output if needed, the White House said in a statement.

“King Salman affirmed that the Kingdom maintains a two million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance,” read the statement.

The White House statement undercut a tweet by Trump earlier in the day when he wrote that Saudi Arabia had definitely agreed to produce more oil.

“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference … Prices to high! He has agreed!” Trump tweeted.

“We will be in uncharted territory. While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year,” said Amrita Sen of consultancy Energy Aspects.

A week ago the Organization of Petroleum Exporting Countries (OPEC) and fellow producers, including Russia, agreed to boost supplies, easing curbs in place since the start of 2017. They did state how much extra supply they would add.

In briefings since then, OPEC officials have signalled the extra volume is likely to be in the range of 700,000 to 1 million bpd. A request by Trump for 2 million bpd more would be at least double market expectations.

Saudi state media reported that during the call, the Saudi king and Trump emphasized the need to preserve oil market stability and efforts of oil-producing countries to compensate for any potential shortage.

The statement reported by Saudi media did not mention any intention by Saudi Arabia to raise production by 2 million bpd. Saudi oil officials did not immediately comment.

Benchmark Brent crude was trading around $79 a barrel on Friday, and a Reuters poll showed prices look to remain strong for the rest of this year due to supply disruptions in countries including Libya and Venezuela and as the extra oil from OPEC fails to meet rising demand.

Saudi Energy Minister Khalid al-Falih met with U.S. Secretary of State Mike Pompeo in Washington on Thursday to discuss energy security.

The Trump administration is pushing countries to cut all imports of Iranian oil from November when the United States re-imposes sanctions against Tehran, after Trump withdrew from the 2015 nuclear deal agreed between Iran and six major powers, calling it a “defective” agreement.

State Department officials said this week the United States is prepared to work with countries on a case-by-case basis to help them reduce imports of Iranian oil and suggested some exemptions were possible.

“They bring to bear economic pressure to separate the nation from the system … but six U.S. presidents before him tried this and had to give up,” Khamenei was quoted as saying on Saturday by his website Khamenei.ir, referring to Trump.

As the world assesses whether the Trump-Kim show was an empty gesture for the cameras, or the start of a substantial process, we can be sure this is not the last proliferation crisis the world will have to deal with.

Its young and energetic Crown Prince Mohammed Bin Salman (MBS) has been grabbing headlines with his global charm offensive and his epic ambition to transform the ultra-conservative kingdom. The overwhelming priority is economic. Despite having 20 per cent of proven global oil supplies, it can no longer sustain its rapidly growing population on this wealth, which accounts for around 70 per cent of government revenue. The Kingdom must create new jobs, implement taxation and cut handouts. It must also create new opportunities for its large youth population, with 32% of under-24s unemployed.

But there is also a strong foreign policy dimension to MBS’s agenda. US retrenchment and growing regional threats have prompted Saudi self-assertion, especially to contain the influence of Iran, which MBS compares with Nazi Germany.

Is that really likely? Certainly the Iranian nuclear threat has not gone away. Even if Iran remains in the framework of the agreement which the Trump administration recently abandoned, restrictions on its nuclear capabilities will begin to ‘sunset’ in 2024. By 2031 Iran will be permitted to stockpile as much enriched uranium as it likes. As Israel’s recent intelligence haul revealed, Iran is well advanced with technologies to turn that uranium into a warhead, meaning it will become a nuclear threshold state, able to construct a bomb within weeks or even days.

The Saudis are generally reckoned to have two possible routes to a bomb. Saudi aid helped fund the Pakistani nuclear program and it has long been speculated that they have secret deal to acquire nukes from Pakistan should they require them. Whilst the wholesale transfer of weapons is considered unlikely, the transfer of sensitive technologies or materials is a very realistic concern.

The Trump administration has not clarified whether they will insist the Saudis refrain from sensitive enrichment and reprocessing activities. Trump officials have told US lawmakers if the US does not sign an agreement, the Russians and Chinese will step in. The Saudis will argue that they should not be denied the right to enrich, that Iran was granted by the JCPOA after years of lies about its nuclear program.

A home grown Saudi nuclear program would take years to develop, but the Iranian and North Korean experience could suggest to the kingdom that playing the long and patient nuclear game can bear fruit in the end. They are not the only Middle East power who could join the nuclear arms race. Egypt – though currently preoccupied with domestic turmoil – has signed a deal for Russia to build a nuclear power plant, and in the past asserted its own right to enrich. Turkey and the UAE are also states to watch, according to leading proliferation experts.

Several recent policies: military intervention in Yemen; attempting to force the resignation of the Lebanese prime minister; and leading a boycott against Qatar, have raised concerns in Western capitals about his judgement.

The possibility of a Saudi nuclear program will be of concern not least to near neighbour Israel. Saudi interests have converged with Israel’s and cooperation is increasing in the face of the threats from Iran and its proxies, as well as Sunni Jihadists. But without progress on the Palestinian issue, security cooperation will remain informal and covert. Israel is unlikely to defer from its long commitment to prevent any of its regional neighbours acquiring nuclear weapons.

Britain and its allies should therefore be concerned not only about the deficiencies in the JCPOA, but about Saudi commitment to match Iran’s capabilities, especially if those capabilities eventually come to match those of North Korea.

Dr Toby Greene is a Senior Research Associate at BICOM and an Israel Institute Post- Doctoral Fellow at the Leonard Davis Institute for International Relations at Hebrew University.

A day before U.S. President Donald Trump withdrew from the Iran nuclear deal, one of his senior officials phoned Saudi Arabia to ask the world’s largest oil exporter to help keep prices stable if the decision disrupted supply.

Riyadh has said that even though prices have spiked to over $80 per barrel, the highest since 2014, the market has yet to recover from a long slump. Until the phone call, Saudi officials had been saying it was too early to raise output.

Riyadh took this line partly because higher crude prices could help the stock market float of a stake in state oil giant Saudi Aramco expected to take place in 2019, Saudi industry sources had told Reuters.

Three sources familiar with the matter said a senior U.S. administration official had called Saudi Crown Prince Mohammed bin Salman before Trump’s announcement to make sure Washington could count on Riyadh, the de facto OPEC leader.

One of the sources said the call took place on May 7. The other two did not specify a date for the call.

Washington was worried that the sanctions would curb deliveries from Iran and push oil prices up, the sources said.

A White House spokesperson declined to comment on whether a call took place.

A senior Saudi official did not confirm the call but said: “We were made aware of the decision on the JCPOA (Joint Comprehensive Plan of Action) before the announcement…We always have conversations with the U.S. about the stability of the oil market.”

The Saudi statement in May threatened to undermine a deal between OPEC and its allies led by Russia to curb output by about 1.8 million barrels per day (bpd), starting from January 2017, to reduce a supply glut and boost prices. The deal is due to expire at the end of 2018.

OPEC will meet on June 22 and needs a consensus of all members to officially change its output policy. Iran’s oil minister, Bijan Zanganeh, said last week he did not agree on the potential need to increase global oil supplies.

An OPEC source familiar with Saudi thinking said that Riyadh and Washington had discussed their oil policies before the U.S. announcement on Iran.

“You need to work with your partners in dealing with any potential effect on supply,” that OPEC source said.

Allies ‘upset’

The sudden shift in Riyadh’s public position came as a surprise to its Gulf allies, who coordinate OPEC policies closely.

Some Gulf countries were “upset that there was no prior consultation with them”, a separate source said. They felt Riyadh had come under pressure from Washington and they had not been consulted before public comments by Saudi Energy Minister Khalid al-Falih.

Falih traveled to Russia’s economic forum in St Petersburg last month and said the kingdom was prepared to gradually ease oil output curbs to calm consumers’ worries.

The shift has also irked some producers outside the Gulf.

“Some people felt they were not properly consulted before the comments in St. Petersburg,” a second OPEC source said.

Since the original international sanctions were lifted in January 2016, Iran has struggled to raise production above 4 million barrels per day. This is due to a lack of new projects.

Iran would benefit less than Saudi Arabia from an increase in supplies if it cannot raise output, as well as receive a lower price for existing production.

A third OPEC source said it would be against the OPEC charter to raise output just because Washington had requested it. “For some OPEC members, this is too much,” the source said.

More pressure

U.S. reliance on Saudi crude imports has decreased in recent years, in part as domestic shale output has risen, but Saudi Arabia remains an important source of U.S. supply.

The U.S. imported 748,000 bpd from Saudi Arabia in March 2018, having reached a post-1970s peak of more than 2 million bpd during 2003, according to figures from the U.S. Energy Information Administration.

Reuters reported in late May that OPEC and its allies could raise production by about 1 million bpd from July to address any potential oil shortages.

In late April, Trump in a tweet criticized OPEC for high oil prices. India and China also raised concerns about high oil prices in separate calls with Falih.

“The thinking before was to continue with the OPEC deal until the end of the year,” a fourth OPEC source said. “But then Trump and the Iran nuclear deal happened and consuming nations started to complain. Consumers are very important for us.”